Skills & Innovation (interview with Korea's Maeil Business Newspaper)

Q: First off, why do you think there is much focus on innovation in the current business market? After all, innovation doesn’t necessarily guarantee success.

A: I think that there are several reasons for this. One is that we live in a time where there is major convergence among a wide range of disruptive innovations occurring across our economic landscapes: mobility, the internet, the internet of things, big data, a preference for personalization, distributed manufacturing, artificial intelligence, and the like. Each of these would be a major change in how we work and live on its own, but together they create a tsunami of change where innovation is at the center, as the engine driving fundamental disruption in nearly every aspect of our lives. No wonder that managers are caught-up in a thirst for applying innovation in their own businesses.

A second reason for the growing attention to innovation is that significant innovative change is occurring in many industries more frequently than ever before, making change more of a continuous phenomena than the traditional episodic character that was formerly ascribed to it. As change becomes more central to strategic decision-making, innovation becomes more important as a strategy choice.

Q: In the Forbes article you wrote(‘Want Innovation? Hire for Skills, Not Attitude’), you argued that if a company wants innovation, it should hire candidates for skills over their behavior. Recently in Korea, there is a widespread emphasis on examining a candidate’s attitude when hiring. Yet, Korean companies also are highly focused on achieving innovation. What advice do you offer to the companies that want innovation but are looking at candidates’ attitudes, rather than talent?

A: Attitudes are important when an industry is in a period that is relatively untouched by the threat of disruption. This is typically in periods of industry growth and maturity around a shared idea of what offerings should look like, and when “efficiency” and “variance reduction” are the dominant determinants of market performance. Attitudes work well in such situations as efficiency and variance reduction are served best by harmonious work groups where team-members support and reinforce each other. However, when disruption looms, and “variance enlargement” is called for, attitudes are not enough to get you across the gap between what made your firm successful in the past, and the new mindsets that you need in a revolutionary future. Here, you need skills, and with these skills often come the possibility of confrontational attitudes. What this means is that you are should not only be choosing new hires differently, but your organizational leaders should be changing their leadership styles as well, in order to realize the most out of the talent that must be assembled.

Q: In relation to the question above, in order to generate innovative products, teamwork it essential. But if a company prefers employees’ skill over attitude, it may be hard for employees to work together because of their pride. In this case, how can managers lead team members to cooperate?

A: Exactly! Teams are always the preferred way of working, no matter where you are in an industry’s evolution [i.e., either on an existing S-curve or facing the need to jump to another S-curve], but how you manage these teams is vastly different. We believe that there is the danger that “polite teams get polite results” and this is not what you want when you are trying to create the future. In situations where you are required to compose skill-determined teams for jumping to a new S-curve, the team leaders must act as “referees” rather than “coaches;” they must position themselves in the middle of the action, rather than on the periphery; they must create the parameters within which the team shall work, but keep out of the solution-space within those parameters, and, as a result, they must be good at “letting go;” they must become “talent-scouts,” assembling their team themselves rather than relying on HR; and, they must live innovatively in order to become role-models for the risk-taking behavior that they wish to inspire. Done well, they will become “star-makers” where their successful team-members will receive both credit and recognition and most likely move on to something completely new.

Q: What specific skills should companies be looking at when hiring employees if they want innovation? Are there common features that global innovative companies look for when hiring?

A: The skills that I’m describing are functional skills, determined by the industry and the nature of the change that is revolutionizing the industry. In periods of great uncertainty, you need strong skills in the direction that you believe that the industry is heading (which may be quite different from the skills that you already possess as a company). Our impression is that you should hire the “best obtainable,” rather than settling for the “best available.” In addition, you would also want some people who are “credible” in these skills but also bring a wide “bandwidth” of curiosity, so that they can pick-up weak signals from communities that the firm is not typically familiar with, and move ideas through the team faster than might otherwise occur.

Q: If you know any specific example of a company that succeeded to achieve innovation by hiring employees based on skills, please explain in detail.

A: There are many. In our book, “Virtuoso Teams,” Andy Boynton and I found quite a number in all walks of life. If I look at recent corporate “virtuoso teams,” I see signs of them in: Apple’s iPod, iPhone, Watch and possibly e-car teams; at Pixar; Amazon’s Game Studios; Oracle’s Team USA America’s Cup 2013 winning team, and in their recent hiring of 90% of the Nebula cloud start-up team; at the Future Lab at Lego, that turned that company around; and at Microsoft’s Surface team, to name but a few. Historic examples would include the British World War II code-breaking team at Bletchley Park, and the American team that designed the B-52 bomber over a weekend; as well as Edward R. Murrow’s “Murrow’s Boys,” who invented broadcast journalism.

Q: Even if an employee is not as skillful compared to the others, skills can be developed and improved. How can companies train employees when it comes to developing talent for innovation?

A: One lesson that we’ve learned is that when you need skills, you need skills. That is not the time to start to train somebody in those skills. Furthermore, we’ve seen in several experiences that when skills are needed to build a virtuoso team, it is better to do without, than to accept someone who isn’t absolutely first-class.

However, there is a second question here regarding “ how can companies train employees when it comes to developing talent for innovation?” I think that the most important thing an organization can do in this regard is to encourage employees to think of change as being normal and that everyone is responsible for innovation. In this way, innovation ceases to be an exception, and becomes the norm. The Chinese home appliance maker Haier has done this extremely well, as we’ve wrote about in our book “Reinventing Giants.”

Q: Do you think a leader who has achieved innovation in the past is more likely to push employees to making innovative products? If yes, please explain the reason.

A: I think that past success always makes future success more likely; as was true with Thomas Edison, Steve Jobs, Jeff Bezos and many others. The major issue here, however, is that the leader must act innovatively in the conduct of their position if they wish their employees to become more innovative. This does not mean that the leader must be the source of innovation, but that they must role-model the innovative behaviors that they wish their organization to adopt.

Q: The use of big data when hiring is gradually gaining popularity. Do you think big data analysis helps companies determine who is a better fit when it comes to innovation? Or does deciding on gut feeling has a better chance to hiring a better candidate? Please explain the reason.

A: When big change is at hand, I think that two things should help in determining which candidates are likely to be the most effective innovators. The first is their level of curiosity: how easy is it for them to accept new ideas and to leave old ways of thinking about their area of functional expertise? The second is to consider their conversational “neighborhoods”: who are they speaking to on a regular basis regarding innovation? How much variety is built into their idea-hunting? Because much of such analysis would be qualitative, I would favor “gut” approaches, supported by data when available.

Q: Apart from hiring skilled employees, what other ways can companies strengthen their ‘innovative qualities’?

A: By making innovation a “verb” (the way we work) rather than a “noun” (the department or group that typically does R&D). If they can make innovation a way of working, no matter what one’s functional responsibility might be, then they’ll go far in making change inclusive, and enlisting everyone’s brains, rather than those of just a few. I also think that if they encourage their employees to regard change as natural and unceasing, then they’ll take the fear out of surprise.

Q: Although innovation is important to a company’s growth, if a company becomes too focused on innovation, it might lose track on seizing other business opportunities. Do you agree? If yes, how can companies balance the various areas of focus?

A: No, I really don’t agree. I’ve never seen a company that has “too much” innovation. I also rarely see organizations that get full value out of their employees’ talent. We live in a time of extraordinary promise, and we need to build organizations that can flourish with such opportunity. Innovation can come from anywhere, as we are seeing with the current flowering of business model innovation. Innovation becomes, to my mind, the license to pursue all possible routes to greater performance and profitability.

Q: Lastly, if there is any additional comment you want to make about innovation and hiring, please share.

A: Most organizations that I see, hire great people and turn them into average employees. This is unacceptable. Human talent is our best chance against such global problems as: climate change, perpetual war, natural resource depletion, wealth disparities, human suffering and all of the other “crimes” that we see committed in our midst. Only by unleashing new ideas will we be able to address such seemingly intractable problems. This means that human talent is a precious resource and should not be wasted by organizations fortunate enough to attract it.

This is a transcript of the original interview. The published outcome (in Korean) can be found here.